Which of the Following Costs Probably Should Not Be Allocated

question 43

Multiple Choice

Which of the following costs probably should not be allocated to the investment needed for a new project?

• A) Project's required increase in accounts receivable
• B) New warehouse, built for this project
• C) A portion of the vice president's salary
• D) Labor expense for employees involved in the project

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Definitions:

Crowding Out

A situation in economics where increased government spending reduces private sector investment or spending due to higher interest rates.

Opportunity Cost

The financial impact of bypassing the next most favorable choice in a decision.

Transfer Payments

These are payments made by the government to individuals or other entities without the government receiving any goods or services in return, such as welfare checks.

Government Budget Deficit

A situation where the government's expenditures exceed its revenues over a specified period of time, leading to borrowing or debt accumulation.